Monday, June 28, 2010

Open Europe press summary: 28 June 2010


Business leaders doubt eurozone will survive beyond 2013
The FT notes that research by the Economist Intelligence Unit commissioned by RBC Capital Markets reveals that world business leaders see a growing risk that the eurozone could break up in the next three years. Half of the 440 chief executives and heads of banks questioned say there is a greater than 50 percent chance of one or more countries leaving the eurozone by 2013. More than a third (36 percent) see at least a 25 percent chance of a complete breakup over the same period. Germany is perceived as the fifth most likely country to pull out, which the article notes may reflect the respondents' concern that Berlin may lose confidence in monetary union if the crisis continues.

Saturday's Guardian reported that, in its first major test, Greece will next month launch its first debt sale since it was forced to accept a €110bn (£90bn) bailout in May.

In the FT Wolfgang Munchau argues that the "eurozone will need to commit itself to a full-blown fiscal union and proper political institutions that give binding macroeconomic instructions to member states for budgetary policy, financial policy and structural policies."

Climate Action Commissioner admits EU has not analysed the impact of its pledge to cut emissions by 30 percent
EU Commissioner for Climate Action Connie Hedegaard has admitted that the economic consequences of increasing the EU's emission reduction target to 30 percent by 2020 had not been thoroughly examined when the EU pledged to raise its 20 percent target. The EU has pledged to raise its target if other developed countries make comparable commitments. She said: "The next step that we need before we can go ahead is to cooperate with the member states to analyse what the consequences of setting the goal would be for them as the potential costs and benefits are not equally spread".

In an interview with Euractiv, she also reaffirmed her support for the introduction of an EU-wide carbon tax. Ms. Hedegaard argued that such a tax could be an important tool to make people consume less energy throughout Europe, and added: "If you do it intelligently, you can have a lot of results coming from energy taxation".

Ashton breaks "budget neutral" promise on EU's diplomatic service
The Sunday Times reported that EU Foreign Minister Catherine Ashton has said that she will have to demand additional funds for the European External Action Service (EEAS), thus backtracking on her previous statement that the EEAS would be "budget neutral". The cost of the service is now expected to reach €900m once the EEAS is fully operational: a 50 percent increase from the current cost of the EU's overseas missions.

Meanwhile, Ashton has requested a US-style "single crisis response centre" under her direct command which would most likely be situated close to Ms Ashton's office in the new EEAS headquarters. According to EUobserver, Ashton wants to give herself a powerful asset when she asks EU foreign ministers to deploy an EU-battle group or if she decides to send an EEAS diplomat on a peace mission. The response centre is expected to have a staff of some 160 people and a budget of €10 to €20 million a year.

G20 agree to cut deficits;
Barosso and Van Rompuy continue to squabble over who sits at top table
There is widespread coverage of the weekend's G20 summit in Toronto with leaders agreeing that richer countries should halve their deficits by 2013. The summit communiqué papered over the different approaches to cutting government spending favoured by the US and European governments, with Germany in particular calling for immediate reductions.

The front page of Handelsblatt claims that "Merkel manages to get her way against Obama", quoting the German Chancellor saying the summit was a "success" and that "it's more than I had expected." AFP reports that the European Council's permanent President Herman Van Rompuy and the Commission's President José Manuel Barroso both claimed an EU "victory" at the summit. "The conclusions of the summit reflect a broad convergence around the European approach", they said. However, in the FT, Alan Beattie and Chris Giles argue "The Group of 20 leading economies agreed a form of words on Sunday that allowed all sides to claim their deficit reduction strategy had won out but is likely to make little difference in practice."

Het Financieele Dagblad quotes a top diplomat commenting on the struggle between Presidents Van Rompuy and Barroso to represent the EU at the summit. He said there were "a lot of negotiations on how we would present the EU at the G20 in Toronto," adding, "it was a whole lot of trouble again".

In Saturday's Independent, Sean O'Grady argued that the economic crisis has forged a strong alliance between Cameron and his Franco-German counterparts, writing that "he is also a staunch supporter of their hawkish fiscal conservatism."

Meanwhile, the FT notes that leaders agreed that banks will be required to hold more capital to balance risks but fell short of agreeing a levy or tax, favoured, in different forms, by Germany, France and the UK. FAZ reports that despite the failure of the G20 to agree an international financial transaction tax, Germany and France want to go it alone and implement it at the EU level. "We want to find a framework which allows us to tax banking activities", French President Nicolas Sarkozy said. Saturday's Guardian reported that David Cameron also called on countries such as Germany, France and Italy to make good on the aid pledges to Africa.

German Finance Minister "confident" of EU ban on naked short-selling
The Guardian reports that Wolfgang Schäuble, Germany's Finance Minister, has said that the EU is close to a 27-member ban on short-selling. This comes in the wake of Germany's unilateral ban last month on speculative trades in top financial stocks, eurozone government bonds and related credit default swaps. Schäuble told Börsen-Zeitung, "I am confident of a ban on naked short-selling [at the EU level], and in financial sector taxation, we are also making progress."

Commission to outline tougher budget sanctions this week
EUobserver reports that the Commission is set to unveil a new strict proposal this Wednesday which could lead to member states having their EU payments withheld if they break the bloc's Stability and Growth Pact. The new plan would allow the Commission to withhold farm payments, roughly 40 percent of the EU's €120 billion annual budget, together with varying types of structural funds. A comprehensive list of tougher budgetary measures will be brought forward by the Commission this September.

El Pais reports that the Commission also wants private debt to be taken into account in disciplinary proceedings that are open to countries with excessive debt. The proposal could disproportionately affect some member states such as Spain, which has a private debt 61 percent above the European average.

Hague: Previous government failed to build relationships in EU
In an interview with the Sunday Telegraph, Foreign Secretary William Hague said, "The last government lectured us on influencing Europe and they were not good at building euro-relationships. They relied on dealing with the larger states, not the smaller ones, which we are doing now, they neglected that. And they never had bright British officials going into the EU institutions. We need to put that right for long-term British influence. No more lectures from the Labour Party, they were short-sighted and cack-handed."

Belgian domestic political crisis could allow Van Rompuy to gain more power
An AFP article suggests that the lack of a permanent Belgian government - a new cabinet is expected to enter office in October - might allow the European Council's President Herman Van Rompuy to exert more power during the Belgian Presidency, which is due to commence next month. Dominik Hierlemann from the Bertelsmann Foundation is quoted saying that "in the medium term, Van Rompuy will emerge as the winner among the EU institutions".

Law Professor: European Arrest Warrant undermining "sovereign jurisdiction over domestic crime and the criminal process"
The Irish Times notes that Prof Dermot Walsh of the University of Limerick has warned that, under the European Arrest Warrant process, a person could be investigated across two or more jurisdictions for the same offence. "This will undermine what might broadly be described as sovereign jurisdiction over domestic crime and the criminal process," he said. "It will loosen the knot that has traditionally tied the investigation and prosecution of a crime to the domestic law enforcement authorities in the jurisdiction where the crime was committed."

German regional minister: "Germany hardly gets involved in the [EU] law-making procedure"
In an interview with DPA, German Minister of the state of Thüringen, Peter Huber, said, "Germany hardly gets involved in the [EU] law-making procedure." He added, "In many other countries they have a Europe minister who develops strategies and decides what policies to back. In England, approximately every year a detailed plan is submitted. The German Federal government does not even manage to send one of its ministers." Meanwhile, he pointed out that there are around 140,000 rules in EU law which affect German citizens directly.

In the Sunday Telegraph, Christopher Booker noted that "According to the Pink Book, we hand over £15 billion yearly to the EU, so we are giving £7 million to Brussels every four hours."

German Presidential election becomes vote on Merkel's leadership
The Telegraph reports that German Chancellor Angela Merkel is facing a crucial presidential election scheduled for Wednesday which could potentially lead to the collapse of her coalition government. The opposition's candidate, Joachim Gauck, has recently emerged as the front-runner in an election which has come to be seen as a vote on Merkel's leadership.

Sale of eggs by the dozen to be banned under new EU regulations
The Express reports that the European Parliament last week voted against Britain's exemption from EU regulations forbidding the selling of goods by number. The new rules mean that instead of labelling on an egg box listing the numbers, it will have to carry their weight in grams. The Mail quotes Environment Secretary Caroline Spelman saying that shoppers "want to buy eggs by the dozen and they should be allowed to - a point I shall be making clear to our partners in Europe."

Italian MEP campaigns for a European UFO Centre
Die Welt reports that Italian MEP Mario Borghezio (Lega Nord - EFD Group) has submitted a written declaration to the European Parliament asking for the creation of a European centre to study UFOs. The article notes that the declaration's cover pictures a gigantic UFO heading to the European Parliament's buildings in Strasbourg. It calls on EU member states to open "public archives on UFOs" and for records "to be declassified by member states."

On her Mail blog, Mary Ellen Synon cites Open Europe's research on the cost of EU communication policy.

The Telegraph reports that Reading University research funded by the EU is attempting to identify suspicious behaviour on board aircraft by implementing a combination of cameras, microphones, explosive sniffers and a sophisticated computer system.

EurActiv notes that MEPs sitting on the European Parliament's Committee on Internal Market and Consumer Protection (IMCO) are split over the Commission's draft Consumer Rights Directive.

De Standaard reports that the UK and France have proposed to enlarge the UN Security Council at the G8 summit preceding the G20, following demands by Germany and India.

FT Deutschland reports that MEPs are calling for an EU-wide speed limit of 120km/h for small trucks in light of environmental concerns. The EP's Environment Committee will vote on a proposal in September but difficult negotiations are expected with member states.

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